Brexit deal may be too little for UK car industry – tech2.org

Brexit deal may be too little for UK car industry


The auto industry wreaked havoc when the UK and European Union Following the Brexit trade deal, but not before the car manufacturers announced the closure of the factory and the plans to build several new vehicles in the country.

There could also be more losses with last week’s deal. Including automaker Nissan Motor Company may struggle to qualify certain UK-assembled models for tariff-free exports to the European Union as they evaluate whether they are sufficient sources for their components locally. The costs associated with switching suppliers and the burden of customs declarations, certifications and audits can still leave car companies and assure that they are better off investing elsewhere.

“It’s still a slim deal with major implications and costs for the motor vehicle,” said David Bailey is a business economics professor at Birmingham Business School in England. “A lot of flexibility will depend on the degree of allowability and phasing.”

Industries under threat

Number of cars produced per year

Source: SMMT 2019 data


The stakes are huge for the UK economy. Country’s auto industry Employs more than 860,000 people, of which a fifth are workers in automobile and parts factories. The region sent 42.4 billion pounds ($ 57 billion) worth of cars and components overseas last year, accounting for 13% of the country’s total exports. The Brexit deal eliminates the risk of widespread exodus, but can still cost less for car makers with much lower costs.

To see

The companies are in the wake of the deal with Nissan and its Japanese peers. The outlook was already tarnished by the Brexit agreement.

Nissan Motor Company suspends production at its UK factory

Newly manufactured Nissan cars at the company’s factory in Sunderland, UK

Photographer: Ian Forsythe / Bloomberg

Company recently Decided against making an electric model at its North England factory and about two years ago It was planned to build another sport utility vehicle at the same location. Is honda motor company To close its only UK car plant next year.

Nissan and Toyota Motor Corp’s hybrid and electric models cut some slack in a Brexit trade deal manufactured in England, with the agreement allowing a greater proportion of vehicle content to come from outside the UK or EU. Nevertheless, the original so-called rules of origin required 10 per cent more local material than what the UK had demanded.

Law of origin
  • Gasoline and diesel cars need to be made with at least 55% local content to avoid tariffs – 5 percent more than what the automaker and the UK wanted.
  • Electric vehicles and hybrids will require 40% local content, 10 percentage points above the UK demand.
  • By 2023, batteries may have more than 70% foreign content, and EVs and hybrids may have 60% foreign content.
  • From 2024 to 2026 – when European battery production is expected to go ahead – the batteries may contain 50% foreign material and EVs and 55% foreign material hybrids.

It is unclear whether Nissan’s all-electric Leaf hatchback manufactured in Sunderland has enough local material to avoid the levy. While Nissan welcomes the trade agreement, it will now “assess the detailed implications for our operations and products,” said Azusa Momose, a company spokesperson in Yokohama by email.

Company spokesman Sonomi Akawa in Tokyo said that Toyota’s Corolla Hybrid compact cars make Burnstone as well as non-electrified vehicles, which are eligible for the EU’s tariff-free exports. The company benefited from its engine plant in Wales, she said.

Nissan decides to make EVs on Brexit concerns in UK

Nissan Leaf Electric Vehicle.

Photographer: Ian Forsythe / Bloomberg

The car manufacturer’s tariff requirements going forward may be affected by their plans to bring their battery supply chain to the area. Electric vehicles will be given another six years to bring foreign materials of less than 45%, threshold gasoline and diesel cars will be held immediately.

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